Season review
Hull City competed in EFL League One following relegation in 2020. The Tigers had been playing in the Premier League as recently as 2017. However, the club did not wallow in self-pity, achieving promotion back to the Championship as champions.This was Hull City’s first league title in 55 years.
It wasn’t great timing to be relegated given the impact of COVID-19 on finances. Despite this, and the fact Hull City recorded a loss of £8.2m, the club did a solid job of reducing its cost base in 2021 which could be a sign of a more financially stable future for the club.
This article analyses the finances of Hull City FC in 2021.
Revenue
Hull City saw its revenue more than half from £15.7m to £6.8m (57%). This was largely due to relegation, however the impact of a full season behind closed doors was also felt.
Matchday
Matchday revenue fell from £5.3m to £3.1m (42%). This number is surprising given a full season without fans in attendance. It is likely that the club retained a portion of season ticket revenue as some fans agreed to help the club.
2022 will see matchday revenue back to full health following the return of fans.
Broadcast
Broadcast revenue fell significantly from £8.3m to £2.8m (66%) following relegation and worsened FA Cup performance.
Hull City’s immediate bounce back to the Championship will see this short-term pain remedied.
Commercial
Hull City saw its commercial revenue more than half from £2.1m to £0.9m (58%) due to both relegation and the inability for partners to engage with the club on matchdays.
Hull City endured a tough financial year following relegation with revenue falling significantly. However, the club’s immediate return will mean its revenue will bounce back to double digits soon enough.
Operating costs
Hull City suffered a huge revenue drop but did a marvellous job of cutting its cost base to match its new financial reality. Operating costs were nearly halved from £26.8m to £14.6m (46%), reducing the impact on profitability significantly.
Wages
Wages more than halved from £17.8m to £8.4m (52%) as relegation wage drop clauses came into effect and high earners departed.
Hull City’s wages to revenue ratio did increase slightly to an even more unhelpful 124% which the club will be hoping to reduce following promotion.
Other costs
Other operating costs fell from £9.0m to £6.1m (32%) due to a combination of lower costs of operating in League One and also no fans on matchdays.
Hull City successful cut back its costs as a necessity following relegation. Now that it has done so, Hull City will not want to overexert itself upon promotion to end up in a similar situation to the past. This will of course need to be managed with the priority of remaining in the Championship.
Transfers
The Tigers had a quiet transfer season like most clubs as they acted cautiously following the pandemic. Hull City signed Docherty (£0.4m) and Coyle (£0.4m) for a combined £0.8m. Departing the KCOM Stadium were Lopes (£1.8m) and Milinkovic (£0.1m) for a total of £1.9m.
The club therefore recorded net transfer income of £1.1m. Hull City noted in its 2021 accounts that it is prioritising its academy to generate players for the first team and income via player sales. This will hence likely see lower fees spent in the transfer market.
Amortisation
Player amortisation charges fell from £7.8m to £2.1m (73%) due to low player investment and player sales. No major signings in the 2021/22 summer transfer window will likely see this figure fall further.
Profit on player sales
Hull City generated £2.9m in player sales in 2021, likely bolstered by sell-on clauses of former players being triggered. The club recorded a profit on player sales of £22.7m in 2020 following sale of Bowen and will be hoping some players in its current squad can generate such figures over the next few years.
Transfer debtors / creditors
Hull City are in a net transfer debtor position, being owed more in transfer fees than it owes. At June 2020 the club was owed £18.7m, largely in relation to Bowen. This has since been paid and the club is owed only £0.4m. Hull City do not owe any amounts in transfer fees.
Hull City is actively looking to prioritise its academy as a key focus area. If successful, this will not only generate income in player sales, but also help improve performances on the pitch as it looks to consolidate in the Championship and ultimately reach the Premier League again.
Profitability
Hull City is loss making at all levels and will be hoping that following promotion, this can be improved.
Operating profit / loss before player trading
Before player trading, Hull City saw its operating losses lessen from £11.0m to £7.8m (30%) due to successful cost cutting. Following promotion, Hull City will be aiming to get closer to break-even.
Operating profit / loss after player trading
After player trading the financial picture reverses with the sale of Bowen seeing the club record a £3.9m profit in 2020. No such player sales in 2021 saw operating losses of £7.0m. With 2021/22 not yielding any large sales to date, it is unlikely player trading will meaningfully impact profitability in 2022.
Profit / loss before tax
Hull City recorded a loss of £8.2m before tax due to £1.2m in finance costs. This was the first overall loss since 2016.
Hull City continue to be focus on operating a financial sustainable model however its approach following promotion will be telling in next year’s account with the need to balance financial stability with survival.
Assets / Liabilities
A relatively successful one-year stay in League One meant that the owners did not have to significantly fund the club in 2021.
Cash flow
Hull City improved its cash reserves from £0.2m to £0.7m. A considerable improvement on its cash outflows from operations (£23.7m to £1.2m) meant the club had little it needed to cover with transfer inflows of £1.7m more than covering this.
There was minimal capital expenditure, and the owner injected a minor £0.2m net into Hull City during the year.
Debt
Debt remained relatively unchanged, falling from £43.4m to £40.8m as little extra debt was taken on and some paid off. This highlights greater financial stability due to the lack of debt required in the year for the club to operate.
Net debt
Hull City’s net debt now stands at £40m (2020: £43.2m).
Final Remarks
Hull City has been operating relatively financially stable in the past few years aided by parachute payments. Relegation appears to have given Hull City a further chance to recalibrate and continue towards financial stability. However, survival in the Championship is the most important aim of the club and should they struggle (as they are now), Hull City may succumb to spending pressures.
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